NHS enters 2015/16 facing biggest challenges in recent history, warns The King’s Fund

Mounting deficits, worsening performance and declining staff morale leave the NHS facing its biggest challenges for many years, warns the latest quarterly monitoring report from The King's Fund.

It now seems certain that hospitals and other NHS providers in England overspent their budgets in 2014/15 by more than £800 million. This is despite nearly £900 million being provided by the Treasury or switched from capital budgets to plug the growing black hole in NHS finances. According to the regular survey undertaken for the report, almost 60 per cent of trust finance directors said that they were dependent on additional financial support or had drawn down their reserves in 2014/15.

The financial outlook for 2015/16 is even gloomier, with two-thirds of hospitals concerned about staying within budget over the next year. Although commissioners are more optimistic, 40 per cent of finance leads from clinical commissioning groups are also concerned about whether they will be able to balance the books in 2015/16.

Other key findings from this quarter’s survey of NHS provider finance directors and CCG finance leads include:

• for the third consecutive quarter, staff morale tops the list of concerns raised by trust finance directors
• fewer than half (45 per cent) of trusts feel confident that they will achieve the productivity targets for 2015/16 
• 90 per cent of trust financial directors and 85 per cent of commissioners are concerned about the financial state of their local health economies 
• there is a mismatch in expectations about demand for services between providers and commissioners; for example, 80 per cent of trusts expect emergency admissions to rise this year, while 60 per cent of CCGs expect them to fall
• around three quarters (75 per cent) of trusts and two thirds (68 per cent) of CCGs think there is a high or very high risk of failing to achieve the productivity gains over the next five years outlined by the NHS five year forward view.

NHS performance continues to deteriorate, with key targets being missed with increasing regularity. The latest data show:

• performance against target waiting times for A&E is at its worst level since 2003, with 8.2 per cent (more than 440,950 patients) waiting longer than four hours in A&E departments in the final quarter of 2014/15
• the number of delayed transfers of care has risen by over 20 per cent compared to the same quarter last year and is now at its highest level since 2008 
• in February 2015 the proportion of inpatients waiting longer than 18 weeks for treatment rose to 13 per cent, the highest level since this target was introduced; however, the number of people still waiting for treatment after 18 weeks dropped, suggesting the policy of allowing a ‘managed breach’ of the targets is having an impact.

Commenting on the report, Richard Murray, Director of Policy at The King's Fund, said: ‘The health service enters the new financial year facing some of the biggest financial and performance challenges in its recent history. If last year was the most difficult for some time, this year promises to be much worse, with little confidence that the alarming deterioration in NHS finances can be arrested.

‘Looking further ahead, while there is still significant scope to improve productivity in the NHS, efficiencies are becoming harder to generate and there is considerable scepticism that the £22 billion in productivity improvements outlined in the NHS five year forward view can be achieved.’